First-Hand Account of History-Making PA Energy Rally

PA Energy Rally - Tom Shepstone picAlthough MDN editor Jim Willis literally missed the bus and could not attend the PA Energy, PA Jobs rally in Harrisburg, PA on Tuesday (see PA Energy Rally Huge Success with Thousands Marching to Capitol), our good friend Tom Shepstone was there. He performs a miracle with his coverage–he captures the tone and essence of the event in written word (and pictures and a video). Tom is a real gem, staunchly pro-drilling, wicked smart–and a superb writer. If MDN could be anyone else, we would be Tom!

Forthwith, here is Tom’s report (from his always excellent Natural Gas Now website) in its entirety–well worth your time to read, especially if you could not attend…
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Chesapeake’s Born Again Zeal for Utica Dry Gas Drilling

Sounding positively ebullient, Chesapeake Energy has let it be known that they are going after dry gas areas in the Utica Shale. Chessy has been testing–and they like what they see from methane-only areas where they happen to own hundreds of thousands of acres of leases in Ohio.

Is it fake enthusiasm because they mostly missed the wet gas area of the play when they leased and they want to psyche out investors? You decide. Appears to us like they are genuinely enthusiastic about dry gas drilling in the Utica. Who knew?…
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Loophole in WV Landfill Law for Drill Cuttings Raises Concern

Two months ago MDN brought you the news that a proposed bill to strengthen landfill requirements for Marcellus Shale drill cuttings (leftover rock and dirt from drilling) in West Virginia had passed in a special session of the legislature (see WV Drill Cuttings in Landfill Bill Passes in Record Time). The new bill, proposed by the WV Dept. of Environmental Protection provides for a special cell where the waste is stored, leachate from that cell monitored, and special radiation detectors installed. All great protections.

The new bill also disallows the special cell for drill cuttings to be built in landfills that sit over top a “karst” topography (where there are a lot of underground caves, sinkholes, cracks and fast-moving underground streams). However, there is one loophole in the new law that recently came to light: If landfills above a karst topography area are happy with maintaining their current lower cap of 9,999 tons per day of solid waste, they can accept drill cuttings in the regular part of the landfill. One WV lawmaker is trying to get that changed, fearing the landfill in his karst district may decide to accept drill cuttings…
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Allegheny Cty Approves Deer Lakes Park Lease, Antis Throw Tantrum

Even though anti-drillers turned out in droves to pack an Allegheny County, PA Council meeting Tuesday night, and even though the Council is packed with Democrats, and even though Council members sat through more than five hours of their own anti-drilling constituents droning on and on about fracking, saying the same stupid things over and over–in the wee hours of Wednesday the Council finally (!) voted to approve a lease for drilling under (not on) Deer Lakes Park (for background, see Allegheny Co Exec Bests Range on Deer Lakes Park Lease Deal). Strangely, some of the Republicans on the Council voted against the plan.

After the vote, the anti-drillers do what they always do–behaved like children throwing a temper tantrum. They hollered, booed and in general made asses of themselves. What will they do now? Burned out hippies need a cause to inject meaning into their otherwise pathetic and meaningless lives. Maybe they’ll try a court case? Who knows–and frankly, who cares. Meanwhile, the grownups, including Range Resources, carry on. Range says they hope to begin drilling under Deer Lakes Park by the end of this year…
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Youngstown Frack Ban Vote Goes Down in Flames for 3rd Time

Youngstown has now voted for a third time on a proposed fracking ban in the city. And for the third time, it was voted down by an overwhelming majority. (For our most recent coverage, see 20 Youngstown U Profs Attempt PR Stunt on Frack Ban – Goes Limp.) Three strikes and you’re out, right? Not according to the virulent anti-drillers who have made opposing the miracle of shale drilling in Ohio their life’s cause.

Susie Beiersdorfer and Lynn Anderson, two of the chief agitators for the ban, something they and others have intentionally mislabeled as a “Community Bill of Rights” (it’s nothing of the sort), say they’re happy to keep wasting taxpayer’s money on useless votes that don’t pass. Didn’t pass the third time? They want it to come back a fourth, fifth, umteenth time. We say it’s time to start sending them the bill for votes that don’t pass. That would stop this nonsense but quick…
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New PA Bill Would Separate Conventional/Unconventional Regulations

This one goes under the “that’s interesting” heading. Three Pennsylvania Republican legislators say they will soon introduce new legislation that will separate regulations for conventional (vertical only) and unconventional (shale) drilling in the state. According to Reps. Martin Causer (R-Turtlepoint), Kathy Rapp (R-Warren) and Matt Gabler (R-Clearfield/Elk), the two styles of drilling are way different and “it simply makes no sense to apply the same standards to these operations.” Huh.

We’re sure the representatives have the best of intentions, but we’re not sure new and different regulations are required. The concern is not about unconventional rules and regulations–the concern is that new rules implemented for unconventional drilling are and have been onerous for traditional/conventional drilling. The claim is that the rules applied across the board to both types of drilling are driving many mom and pop drilling operations out of business. Below is the press announcement and justification for the politicians’ proposed new legislation. We’ll reserve judgment for now and wait to hear more. In the mean time, we come down on the slightly skeptical side that this is truly needed…
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Bend Over Ohio – You’re About to Get a Frack Tax

In classic socialist manner, a Republican-controlled Ohio House committee is set to vote today on a “compromise” (meaning it will hurt just a little less) bill that will raise Ohio’s severance tax on shale drilling, thereby reducing the economic miracle in the state. We’re still “months away” from final passage of the measure, but if this vote goes in favor of a high frack tax, you can be sure it will pass the full House and Senate. Which is unfortunate for Ohio’s landowners, drillers and the many people who now work for the industry and related businesses that sell to the industry. It will certainly mean a slow-down in drilling.

All because Gov. John “foreigner hunter” Kasich wants to transfer wealth from those who produce it (landowners and drillers, out of whose pockets it will come) to those who do not produce (via a state income tax cut). It’s sleazy–but there you go. Of particular interest is that most of the new tax (85% of it) will go out of the communities where drilling actually happens. The political calculation is that a few pennies on the dollar will buy those communities’ silence that they’re being robbed (better something than nothing, right?). In Pennsylvania, 60% of the money raised through a reasonable impact fee stays in the communities where drilling happens. That’s the right way to do it…
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Sunoco Logsitics CEO Says Legal Issues Won’t Delay Mainer East

Sunoco Logistics held an analyst call yesterday to discuss first quarter 2014 earnings and operations. On the call, Sunoco Logistics’ CEO Michael Hennigan had quite a bit to say about both the Mariner East 1 pipeline, due online starting later this year, and the proposed Mariner East 2 pipeline that would run along side Mariner East 1. MDN has been monitoring the latest legal situation with Mariner East and with Sunoco’s request to be made a public utility corporation (for the latest, see Sunoco Hires Big Gun Law Firms to Help Complete Ethane Pipeline).

MDN found Hennigan’s comments interesting. When asked by an analyst about the NIMBY pushback their getting in building the 50-mile pipeline in western PA, and the pushback on building new compressor stations in eastern PA and whether that would delay or cost the company more money–Hennigan said “no” and that Sunoco is “very confident that we can work through those issues.” Bluster? Brave face for investors? Calm assurance? Who knows. MDN has extracted all of the comments and Q&A’s from yesterday’s call that touch on either the Mariner East 1 or 2, or Mariner West pipeline. We’ve also embedded (below) a copy of the PowerPoint slides used during the call. Pay attention, in particular, to the slides on pages 9, 10 and 11…
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MarkWest Energy 1Q14: Earnings Up 33%, Focus on Marcellus/Utica

MarkWest Energy released their first quarter 2014 update yesterday. As MDN pointed out just yesterday, MarkWest currently has 17 major pipeline and processing plant projects under way in the Marcellus and Utica, of the 17 they intend to complete 11 of them by the end of this year (see MarkWest Announces 2 Processing Plant Expansions in WV, 400 Mmcf/d). From yesterday’s update we learn that earnings were up 33% over the same quarter last year. Although MarkWest operates in other areas of the country, yesterday’s update makes it obvious that most of their assets–and focus–are on the Marcellus and Utica Shale region.

Here’s yesterday’s update with a rundown of what’s happening with their projects in the Marcellus and Utica:
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Antero Resources 1Q14: Production Up 105%, Earnings Down $95M

Antero Resources released their first quarter 2014 update yesterday. Antero is a big and important driller in both the Marcellus and Utica Shale region–particularly in the wet gas areas of West Virginia and eastern Ohio. Antero reports daily gas equivalent (converting liquids to gas) production reached an average 786 million cubic feet equivalent per day (MMcfe/d) in the first quarter, up a healthy 105% from first quarter in 2013. They’re also producing more liquids than ever–16,332 barrrels per day, a 583% increase over 1Q13. On the down side, they report a net loss from operations of $95 million for 1Q14–mostly due to hedging in the financial markets. If you took away the hedging losses, net income would have been up $88 million, or 225% over 1Q13.

In the update below Antero talks about their recent lease acquisition of Piedmont Lake in Ohio’s Utica Shale, and about the recent announcement (from two days ago) that they have committed to another 200 million cubic feet per day of processing capacity at MarkWest’s Sherwood facility in Doddridge County, WV. Here’s the update…
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